Drilling permit dip concerns officials

Moffat County saw a decrease in drilling permit applications filed by oil and natural gas companies in 2009.

Some area officials say new regulations designed to better protect wildlife and the environment from potential harm caused by drilling for oil and gas are to blame, while others point to a downward economy or a drop in natural gas prices.

The regulations, which took effect in spring 2009, were fostered by citizen concerns for drilling spills, releases, seeps, well contamination, storm water run-offs, odors and wildlife impacts, according to the Colorado Oil & Gas Conservation Commission.

Although a dropping economy and fluxing natural gas prices have played a factor, Moffat County Natural Resources Director Jeff Comstock said the new regulations are to blame.

David Neslin, director of the Colorado Oil & Gas Conser­vation Commission, said de­­creased drilling permits had little to do with the new legislation, however.

Neslin points instead to a 50- to 70-percent drop in natural gas prices.

Natural gas sold for about $9 per thousand cubic foot in 2008 and dropped to about $3 per thousand cubic foot in 2009, he said.

Because of the high prices, 2008 saw a record high 8,027 drilling permits issued statewide, which dropped to 5,159 permits in 2009. Moffat County had 51 permits issued in 2009.

Comstock said this is because of energy resource companies wanting to submit their permits before the new regulations occurred.

In March 2009, Moffat County received 22 applications for drilling permits, accounting for 43 percent of all requests that year, and March and April combined accounted for 64 percent of all applications in the year.

The new rules implemented by Colorado House Bills 07-1298 and 07-1341 took effect in April on private land and July on federal land of 2009.

Since October, five drilling permit applications have been granted for the county while eight are pending approval for 2010. Six location assessments for additional drilling pads are also pending.

The low numbers in permits are concerning to state Rep. Randy Baumgardner, R-Hot Sulphur Springs, who said the regulations “are the straw that broke the camel’s back.”

“Talking with the oil and gas companies, I’m finding out (the drilling regulations) are a huge deterrent to the industry here in the state,” he said. “It’s cheaper for them to go to another state. Even though the tax base may be higher, over a period of time they can operate cheaper.”

The current permit request activity in Moffat County isn’t stirring Neslin’s stance, however.

“That wouldn’t strike me as significantly out of range with what Moffat’s experiences have been over the last five or six years,” he said. “So far in 2010, application levels are back to where they were in 2007.”

Although drilling requests are down about 35 percent from 2008 in Colorado, Neslin said “we fared better than most of our neighbors.”

The 5,159 permits issued in 2009 are about 2,000 more permits more than Kansas, Oklahoma and New Mexico and about 4,000 more than Utah or Montana.

Baumgardner said the processing time on applications to drill also may be affecting the industry in Colorado.

“It takes about two to three days in other states to have a permit but here in Colorado it takes 30, 60 or 90 days to get a permit approved,” Baum­gardner said. “It’s just not business friendly to oil and gas here in the state.”

David Ludlam, executive director of the West Slope Colorado Oil and Gas Asso­ciation, said the regulations are making the gas industry in Colorado unstable.

“Like an earthquake, the rule-making created enough instability to keep companies off-balance,” he said in a statement. “Are companies pulling out? No. I’d say they’re rebuilding for the long term and hoping against regulatory aftershocks that might create more instability.”

The potential drop in revenue also could hurt the county financially.

Moffat County projected a $110 million drop in proposed county assessed value for 2010 and 60 percent of that could be attributed to potential oil and gas price drops, Moffat County Assessor Suzanne Brinks said.

“Price and regulatory factors can’t be separated and measured against each other,” Ludlam said. “High prices are better for our business, but no investor in their right mind wants to build a drilling program around a regulatory fault zone, prone to quakes and instability.”

Moffat County Commissioner Tom Mathers said the problem comes from a combination of things but that Gov. Bill Ritter isn’t helping the situation.

“Gov. Ritter’s rules and regulations run (oil and gas) right out of the county,” Mathers said. “The first time I met Ritter ... I told him ‘Please don’t protect us into starvation’ ... and that is exactly what he has done.”

Wow. Another completely one-sided article on the oil and gas industry from our local fishwrap. This old yarn about the state's oil and gas regulations driving business out of the state has been proven false again and again in many of our state's more objective newspapers (and more respected...funny how that works). Even the Grand Junction Sentinel took the time to seek out the facts (more wells permitted in Colorado than ANY of its neighboring states; almost twice as many wells drilled in Colorado than Wyoming--a state unencumbered by Colorado's "dreaded" state oil and gas regulations).

The Craig Daily Press has a responsibility to print the news. And yes, obvious hyperbole and misstatements like those of Mr. Baumgartner and Mr. Mathers in this article are certainly newsworthy. But by simply printing the quotes, and not seeking out the real facts to either prove or disprove these statements, the Daily Press fails to provide journalism, while simply providing propaganda instead.

Very disappointing that Mr Smith did NOT take the time to talk with the other side. We have terrific resources in this community including a couple of moderate, science-based environmental organizations, so there is really NO excuse for such unbalanced pseudo-news. Furthermore, COGCC stats. dispute the claims made by Mr. Comstock and Rep. Baumgardner. Makes me wonder how much O&G funding the two get and if O&G is paying the press these days or have you all just forgotten everything you know about responsible, balanced, ethical news coverage? Time to go back to Journalism 101 Or at very least follow the money! I’m pretty Cynical that the wealthiest industry in the history of humanity can’t “afford” to do business in Colorado. The minerals aren’t going away. Our community should get fair market value and we expect all industries to do business in such a way as to leave our land, air, wildlife and communities and other industries healthy!

I beg to differ with the above comments. i've lived in Moffat County for over a quarter century, and have made my living working in Mineral extraction, primarily Oil & Gas exploration.

First, drilling results in Moffat County have never come close to what has happened in Garfield & Rio Blanco Counties, particularly the Parachute/Piceance area. Why? the product (oil & gas) is not as prolific in Moffat as it has been discovered down there. Sure there is some product here, but not nearly in the quantity and presence as has been discovered there. Moffat's oil & gas deposits are far more scattered, and appear in small areas, sometimes known as 'domes'.

Second, i totally agree with Mr Smith's article that the new Regulations that permeate both CO Oil & Gas Conservation Commission (COGCC) and CO Dept of Public health & Environment (CDPHE) are very instrumental in driving Oil & Gas Operators out of this state.

We don't have that many Operators working locally here now, and I personally know of three of those, in the local Craig area (Eastern Moffat & Western Routt Counties) who have recently SOLD OUT and are selling other fields in CO, as they are busily moving their operations out of the state. Two of these kept wells just across the state line in WY, but have simply had enough of Colorado's latest environmental onslaught, led by now Lame-Duck Ritter.

I do not understand the new COGCC Director's comments, he is mistaken, I have spoken directly with O&G people who have and are selling their Colorado interests, because of over zealous regulators, who are now armed with an unending plethora of rules & regulations.

I personally know of two local O&G service businesses who, if the new regulations are imposed on them as has been threatened, will be out of business by the end of 2010 or shortly after.

With that, they will take several well paid local jobs and $2-3M annually out of the local economy. This is revenue that comes from Operators who are located outside of this area, who pay for services to these local firms, who then hire locals, and buy local products & services, and pay many local taxes. These dollars then revolve thru the local economy until dissipated.

Yet, the powers that be in Denver have decided that "Denver Knows Best" !!!! and they draw up regulations that no one in their right minds can live with. I deal with it personally all the time. No one wants to wreck the local ecology, or drive away the deer & elk herds, etc. But without well paying jobs, the rest of us are left to feed from each other. And that is indeed a slippery downhill slope !!

Oh quit your worrying with the rise in gas prices and the onset of tourist season and more rises in gas the drilling will pick up again. The greedy oil companies ploy is working just like they figured it would. When the american public get PO'd enough and the government starts to ask questions we will just stop our exploration of future oil and gas until the supply and demand drives the prices up and it once again becomes extremely profitable to drill and we can gouge Joe the plumber once again.